Amendment No. 2 to Administration Agreement for AusAID Grant TF071266 Conformed

 CONFORMED COPY Stefan G. Koeberle Country Director, Indonesia Letter No.CD-588/PAMSIMAS/XI/2011 December 7, 2011 Mr. Peter Baxter Director General AusAID 255 London Circuit Canberra, ACT 2601 Australia Dear Mr. Baxter: Re: Amendment No. 2 to the Administration Agreement (AusAID) Agreement No. 50416 and World Bank TF071266) between the Government of Australia, acting through the Australian Agency for International Development and the International Bank for Reconstruction and Development / International Development Association for the Support for the Third Water Supply and Sanitation for Low Income Communities Project (PAMSIMAS) 1. We refer to the Administration Agreement between the Government of Australia, acting through the Australian Agency for International Development, (the "Donor") and the International Bank for Reconstruction and Development (the "Bank"), regarding the Support for the Third Water Supply and Sanitation for Low Income Communities Project (PAMSIMAS) Trust Fund (the "Trust Fund") (TF071266) dated May 18, 2009, and amended on June 4, 2010 (the "Administration Agreement"). 2. We are pleased to acknowledge, on behalf of the Bank, the intention of the Donor to make a supplemental contribution to the Trust Fund in the amount of seven million Australian Dollars (AUD7,000,000) (the "Supplemental Contribution"). With this Supplemental Contribution, the total amount allocated by the Donor to the Trust Fund will now aggregate to thirty nine million five hundred thousand Australian Dollars (AUD39,500,000) (the "Contribution"). 3. The Donor shall deposit the Supplemental Contribution into such bank account designated by the Bank promptly following countersignature of this Agreement by the Donor and submission of a payment request by the Bank. 4. When making such deposit, the Donor shall instruct its bank to include in its payment details information (remittance advice) field of its SWIFT payment message, information indicating: the amount paid, that the payment is made by the Donor for the TF 071266 Support for the Third Water Supply and Sanitation for Low Income Communities Project (PAMSIMAS), and the date of the deposit. In addition the Donor shall provide a copy of the deposit instruction to the Bank’s Accounting Trust Funds Division by e-mail sent to tfremitadvice@worldbank.org or by fax sent to (202) 614-1315. Mr. Peter Baxter 2 of 3 December 7, 2011 AusAID 5. Immediately upon receipt of the Contribution funds, the Bank will convert such funds into United States Dollars. 6. Furthermore, notwithstanding Article 6 (Cost Recovery) of the Administration Agreement, in order to assist in the defrayment of the costs of administration and other expenses incurred by the Bank under this Agreement, the Bank may, following deposit of the Supplemental Contribution by the Donor, deduct from the Supplemental Contribution and retain for the Bank's own account an amount equal to two percent (2%) of the Supplemental Contribution. Additionally, the Bank will deduct from the Supplemental Contribution an amount representing the actual costs of program administration, such costs not to exceed maximum 1.6 % of the total contributions but not less than six hundred thirty eight thousand six hundred fifty nine United States Dollars (USD638,659). 7. Additionally, pursuant to recent discussions between the Bank and the Donor, the Bank proposes to amend Section 3.01 of Article 3 of the Administration Agreement to extend the end disbursement date as follows: “Section 3.01 The Contribution funds may be used to finance expenditures for the Project commencing on the date of this Agreement and ending on December 31, 2013. The Bank may make disbursements of the Contribution funds for up to six (6) months after such latter date for expenditures incurred on or before such date, in accordance with the Bank’s applicable policies and procedures. The Bank shall only disburse the Contribution funds after June 30, 2014 with the written approval of the Donor.